The consequence of storing the source with escape sequences and the fact that 7-bit clean source even using UTF escapes is encoded as US-ASCII is that the underlying Oniguruma data must be maintained separately and the string potentially unescaped every match. At least, that is the best understanding I have of the MRI source code. AFAIK, this is not defined anywhere.

Because Regexp Literals are not String Literals, and escapes in them have different meanings.
For example \b, it is word boundary in Regexp but BEL in String.
People will need to distingish word boundary from BEL, so \b must be showed as \b.
\uXXXX follows such style.

But as my example shows, if the bytes were in a literal String used to create the Regexp, they are already converted. And everything works just fine.

What's the rationale for not converting \u{}? Just because it is an escape sequence doesn't mean it is a Regexp escape sequence. Why are they treated the same? It creates inconsistency between two identical Regexps except that one came from a String or Regexp literal with interpolation.